DCs Need People and Power
10th September 2024
Brokers and commercial estate agents play an important role in the logistics infrastructure landscape. David Priestman met with Colliers’ Rob Whatmuff (pictured) and Andrea Ferranti at UKREiiF in Leeds.
A major player in the industrial property sector, with around 70% of this activity in warehousing, particularly national distribution centres (NDC) and retail DCs (RDC), Colliers act as a broker to bring both the developer and the occupier customer to the table. “So we see both sides,” Whatmuff explains. “The scale is for larger and larger hub and spoke facilities, up to 330,000 sq.ft.”
60% of the company’s projects are for the landlord of the property – a developer or investment fund – with 40% being for the end-user occupier or third party logistics operator. End-user customers include ASDA, DHL, Howdens, Superdry, Aldi and Electrolux. Segro and Prologis are clients as developers. The iPort in Doncaster is one successful multimodal hub scheme, with multiple occupiers and rail connectivity, that Colliers has been involved with.
I asked Whatmuff what specific trend he is seeing in warehousing. “From an investor perspective mezzanines and maximising the 3D space usage of a DC makes them more attractive than low-rise, single-story sheds. We’re looking for more RDCs, mapping locations and availability, deliverability and financing.”
Making a good impression
Planning issues are always a factor in determining the speed of delivery of a new distribution centre. “Sometimes there is a negative reception to an application for a warehouse,” he adds. “Residential concerns are overused and we work to demonstrate that our developments are positive for the community.”
Ferranti’s role is in data and research. He advises clients about national locations based upon analysing parameters such as vacancy rates, take-up, suppliers, tenant profiling and size bands. That provides the valuable insight necessary to make the right investments. “Unit type is either speculative or dedicated development,” he says. “I’m studying the demand from occupiers, short or long term, as well as sustainability issues and the use of renewable energy.”
“People and power are always key when selecting the right location,” Whatmuff concludes. “How tight is the labour market there? What is the power availability on the site, particularly when considering electric vans and lorries?” All these factors are taken into account.
Warehouse take-up returns
Take-up of warehouses of 100,000+ sq. ft has returned to a more stabilised level, in line with the long-term pre-Covid H1 average of 14m sq. ft, says Colliers. According to the firm’s latest Industrial & Logistics Market Pulse Mid-Year analysis, between January and June 2024, take up of industrial space of 100,000+ sq. ft reached 13.3m, up 4.4 per cent year-on-year, across 53 deals. In 2024 the industrial market has seen resilient take-up through mega-sized deals. Last year for the same period the market had processed 60 transactions, which corresponds with the ten-year H1 average for deals pre-Covid of 62.
Across the whole market second-hand space was the most popular warehouse product in H1 with 37 per cent of total take-up being in this category. Some 31 per cent of take-up was in build-to-suit units for occupiers and the remaining 32 per cent was for speculatively developed space. The most acquisitive occupiers in H1 2024 were storage and third party logistics suppliers (46%), followed by wholesale/retail (24%).
Andrea Ferranti, Head of Industrial Research at Colliers added: “We can see that due to the economic challenges of the last 18 months development of speculative supply has decreased and availability of prime warehouses is going to be impacted over the next 12 months. We’re anticipating that with improving market conditions and consumer sentiment, industrial occupiers will need to become more acquisitive once again to meet demand. However they could be facing a lack of good quality space, which could impact their corporate real estate strategies, particularly around ESG credentials, in the near future.”
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